Global Benchmarking Automobile Supplier Industry

Transcription

1 Global Benchmarking Automobile Supplier Industry Comments Transitions: The State of the Automotive Industry Federal Reserve Bank of Chicago Chicago, IL June 11, 2007 Thomas Klier Senior Economist Federal Reserve Bank of Chicago

2 Objective of global auto supplier benchmarking study Context: Increasing globalization of value chain in auto sector Objective: Compare performance of parts suppliers around the world 3 major markets: Europe, North America, and Asia Focus on 3 parts: seats, exhaust systems, brakes

3 Methodology Extensive field work. Start with OEM interviews and plant visits. Then interview suppliers for car seats, exhaust systems, and brakes for each plant visited. Main questions: Productivity and quality gap for same part across regions Sharing of technology and engineering capability Depth of domestic supply chain in each country Changes in comparative advantage

4 Comments Big Picture Auto industry supply chains are becoming more global in more ways than one. For example, from the U.S. perspective we observe: Increasing trade in motor vehicle parts, trade patterns vary by part Increasing globalization of domestic motor vehicle parts production Changing mix and behavior of car manufacturers

5 Motor vehicle parts imports are rising

6 Trade patterns vary by subsystem (and part) $6 $5 Canada Mexico Japan Rest of world $4 $3 $2 $1 $- Engine Engine Parts Fluid & Air Electrical Drivetrain Chassis Body Interior Other

7 Domestic auto parts production more global Share of OE and aftermarket parts sourced from U.S.-located auto suppliers U.S.-owned Foreign-owned Source: Dennis DesRosiers presentation, Chicago Fed conference in Detroit, 04/19/2006

8 U.S. producers sourcing patterns are changing Production-weighted Domestic Content of Light Vehicles 90% Big 3 New Domestics 80% 70% 60% 50% 40% 30% 20% 10% 0%

9 GM global sourcing approach GM buys the best quality at the lowest landed cost GM sources regionally across its major markets GMNA GMAP GME GMLAAM NA 97% AP 94% EU 96% LA 93% Source: Bo Andersson. GM Global Purchasing VP, presentation at Chicago Fed Conference April 18/ , Detroit

10 Comments specifics of study Field work approach Choice of parts to be benchmarked Car seats consistently produced in very close vicinity of assembly plant. Little trade in seats. Lots of trade in seat components, such as seat frame, upholstery, and padding. Exhaust systems hard to ship as bulky and quite fragile. Different for individual parts such as catalytic converter, muffler etc. Brakes essentially a commodity part. Of the three parts in study the only truly global part.

11 Every assembly plant has its seat plant Thomas Klier, Federal Reserve Bank of Chicago. Source: ELM, company websites, Maptitude

12 Source: Company website Tenneco s global footprint

13 Comments specifics of study (ctd.) Expectations Expect findings to depend on the extent to which part is a global part, i.e. the extent to which it is exported. The more trade, the more pressure for convergence in measurable outcomes such as productivity and quality. What role for car maker s approach toward its supply base in explaining findings? Toyota: fosters strategic and long-term relationships GM: relationships tend to be adversarial and short term

14 It is all about the parts